Opinion
E049787 Super.Ct.No. RID214872
08-02-2011
In re the Marriage of IRMA BATANG and LEON H. MANTO. IRMA BATANG, Appellant, v. LEON H. MANTO, Respondent.
Gassner & Gassner and Stephen Gassner for Appellant. Leon H. Manto, in pro. per., for Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
OPINION
APPEAL from the Superior Court of Riverside County. Becky Dugan, Judge. Affirmed.
Gassner & Gassner and Stephen Gassner for Appellant.
Leon H. Manto, in pro. per., for Respondent.
I. INTRODUCTION
In this marital dissolution action between Appellant Irma Batang and Respondent Leon H. Manto, Batang has filed an appeal challenging the trial court's division of the parties' community property. Batang argues that (1) the trial court's statement of decision procedure was flawed and deprived her of the opportunity to object to the statement before judgment; (2) the trial court's judgment and findings regarding the Bulrush property should be reversed because (a) the judgment was improperly based on an alleged breach of fiduciary duty, an issue that was not pleaded, and (b) the court did not allow her to present any evidence regarding the value of the property at trial; (3) the trial court's failure to trace the Post Oak property's down payment to Batang's separate property was error; and (4) the trial court's valuation of an Oriental rug is not supported by the evidence.
II. FACTUAL BACKGROUND AND TRIAL COURT PROCEEDINGS
Manto and Batang were married on January 23, 2004, and separated on October 28, 2005. Batang filed a petition for dissolution of marriage on April 24, 2006. Following a judgment of dissolution, a trial on reserved issues was held in July and August 2008. Manto worked in the Navy and was stationed in Japan for a substantial portion of the marriage. Batang worked as a nurse and managed the significant amount of property that the two had acquired during their marriage.
A. The Bulrush Property
Manto and Batang purchased a house in Corona (the Bulrush property) for $986,686 in February 2005. By May 2006 the value of the property appeared to have appreciated considerably. On May 17, after the couple separated, Manto executed a grant deed at Batang's request and transferred his interest in the home to Batang as her sole and separate property. Manto testified that he agreed to transfer his interest in the property to Batang in consideration for his share of equity in the property at the time. Manto introduced into evidence an e-mail Batang sent him a few weeks before the transfer that appeared to substantiate his claims regarding the existence and terms of the agreement. Initially, Batang denied that she agreed to pay any consideration for the transfer, stating the purpose of the transfer was so that she could refinance the property and use the proceeds to help pay for expenses on the home. Later, however, Batang testified that the agreement between her and Manto was that she would compensate him for his share in equity at the time of divorce, not at the time of the agreement or separation.
Shortly after the deed transfer, Batang put the Bulrush property into her and her daughter's names, as joint tenants. In January 2007, Batang refinanced the property and received a "cash out" of $145,551.25. Batang did not tell Manto about refinancing the home and concealed the cash out proceeds from him.
By the time trial commenced, the value of the Bulrush property had plummeted far below the initial purchase price; Batang testified it was then worth only about $657,000, with encumbrances totaling over $1.1 million. Batang requested that the court divide the Bulrush property's encumbrances equally and reimburse her for any separate property contributions she made toward the mortgage after the transfer.
B. The Post Oak Property
Manto and Batang purchased a house in Murrieta (the Post Oak property) in May 2005, with a down payment of $53,136.06. The property was sold in October 2006. Batang testified at trial that the source of the down payment could be traced to an equity line of credit from a Chino Hills home that was her sole and separate property.
C. The Oriental Rug
During the mandatory settlement conference, Batang was ordered to turn over an Oriental rug purchased in Japan for purposes of equalization. At trial, Batang testified that she threw away the rug because it had been ruined by her dogs. Manto testified that the rug was worth $3,500.
D. Statement of Decision Proceedings
Just prior to the completion of the trial, Batang's counsel, Bradley J. Hague, proposed, "we can both prepare a statement of decision. . . . And then your Honor can . . . choose one of the statements of decision. We can go that way, or we can do briefs and be heard on the briefs, however your Honor wants to be heard on that." The court responded: "Okay. Let's do this, Mr. Hague. . . . why don't you have your closing briefs filed . . . . [¶] . . . [¶] . . . And then I would like [Manto] to have the opportunity to look at that so that [he] can file [his] closing briefs . . . ." "[T]he matter," continued the court, "will be deemed submitted as of the submission of the last brief . . . ." Batang's counsel and Manto both acquiesced in the procedure.
The court wrote in its statement of decision that, because neither party had requested a statement of decision, the court's statement would serve as the "final Statement of Decision." The court stated that its decision was "governed by the overriding fiduciary obligations that the parties have to one another, as set forth in Family Code section 721." It found that in this case, these obligations were particularly important because Batang held power of attorney for Manto and managed all of the couple's finances and real property.
As to the Bulrush property, the court found that Batang had breached her fiduciary duties by "not being forthright with regard to the existence of the new loan transaction." The court awarded the entire property to Batang along with its encumbrance and awarded Manto his share in equity of the property at the time of the deed transfer, which the court found to be $59,000.
The court found that Batang was unable to adequately trace the down payment for the Post Oak property to a separate property source and denied her request for reimbursement.
Finally, the court valued the Oriental rug at $3,500, in light of Manto's uncontroverted testimony.
Additional facts are set forth in the discussion of the issues to which they are relevant.
III. DISCUSSION
A. Standard of Review
We review a trial court's ruling dividing property for abuse of discretion. (In re Marriage of Dellaria & Blickman-Dellaria (2009) 172 Cal.App.4th 196, 201.) We uphold factual findings if they are supported by substantial evidence (ibid.), and we indulge all intendments and presumptions in favor of the judgment's correctness (Aceves v. Regal Pale Brewing Co. (1979) 24 Cal.3d 502, 507, overruled on another ground in Privette v. Superior Court (1993) 5 Cal.4th 689, 696.). Where a trial court's decision presents a pure question of law, however, we review it de novo. (Dellaria, supra, at p. 201.)
B. Statement of Decision Procedure
Batang contends it was "probably error" for the trial court to issue a proposed judgment without first issuing a tentative statement or acknowledging that the parties had requested a statement of decision. She argues that as a result, this court should not apply any implied findings rule. However, Batang does not identify any issues as to which the trial court made implied findings. She appeals the trial court's explicit finding that she breached her fiduciary duty to Manto in regard to the Bulrush property, and she contends the evidence is insufficient to support the trial court's explicit findings that she failed to trace her separate property contributions to the Post Oak property and that Manto was entitled to reimbursement for the $3,500 value of an Oriental rug. Thus, simply put, "there are no 'findings' to be implied in favor of the prevailing party which could alter the analysis." (United Services Auto. Assn. v. Dalrymple (1991) 232 Cal.App.3d 182, 186.) Accordingly, even if the trial court erred in its statement of decision procedure, Batang has failed to demonstrate any prejudice from the error. (Code Civ. Proc., § 475.)
C. The Bulrush Property
The trial court has discretion to depart from the prescription of Family Codesections 2550 and 2552 and effect an unequal division of property if it finds that one spouse breached his or her fiduciary duty to the other. (§ 1101, subds. (a) and (g), Marriage of Quay (1993) 18 Cal.App.4th 961, 972-973 [risky investment assigned to spouse who made the investment in breach of fiduciary duty].) In this case, the court found that Batang's conduct fell below the prescribed fiduciary standards. Batang unilaterally refinanced the Bulrush property and received a cash out of $145,551.25. Batang did not notify Manto about the transaction and concealed the cash out proceeds from him. The court found this conduct especially troubling because Manto "placed all his trust and assets in the hands of [Batang]," who managed and controlled the community property while Manto was stationed in Japan. (See In re Marriage of Koppelman (1984) 159 Cal.App.3d 627, 634 [stating that a spouse who controls community property assets occupies a position of trust with regard to those assets even after legal separation], disapproved of on other grounds by In re Marriage of Fabian (1986) 41 Cal.3d 440, 451, fn. 13.) We find the court did not abuse its discretion in its division of the property. Section 2550 provides: "Except upon the written agreement of the parties, or on oral stipulation of the parties in open court . . . in a proceeding for dissolution of marriage or for legal separation of the parties, the court shall . . . divide the community estate of the parties equally."
Unless otherwise noted, all further statutory references shall be to the Family Code.
Section 2552, subdivision (a) provides: "For the purpose of division of the community estate upon dissolution of marriage or legal separation of the parties . . . the court shall value the assets and liabilities as near as practicable to the time of trial."
Section 1101, subd. (g) provides: "Remedies for breach of the fiduciary duty by one spouse . . . shall include, but not be limited to, an award to the other spouse of 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty . . . . The value of the asset shall be determined to be its highest value at the date of the breach of the fiduciary duty, the date of the sale or disposition of the asset, or the date of the award by the court." (Italics added.)
Batang argues, however, that the court's finding was unwarranted because the issue of fiduciary duty was not pleaded at trial. We disagree. Courts may appropriately make a finding on an unpleaded issue if the issue was "actually and intentionally" tried by the introduction of supporting evidence. (Lein v. Parkin (1957) 49 Cal.2d 397, 400401; Miller v. Peters (1951) 37 Cal.2d 89, 93.) However, "'"evidence which is relevant to an issue actually raised by the pleadings cannot be considered as authorizing the determination of an issue not presented." [Citation.]' [Citation.]" (Lein, supra, at p. 401.) In Lein, the court reviewed a trial court's finding of assumption of risk in a personal injury action, which was challenged on the basis that the issue was outside the pleadings. (Ibid.) The appellate court reversed the trial court's findings because it found that "all [the] evidence upon which [the respondent] relie[d] to justify the consideration by the trial court of the unpleaded defense of assumption of risk was evidence relevant to the pleaded issue of defendant's negligence." (Ibid.)
That is not the case here. During cross-examination, Batang admitted that, from the date of the transaction to the date of the divorce (11 months), she did not inform Manto she had refinanced the Bulrush property and had received a substantial cash out. This testimony, which was admitted without objection, supported a breach of fiduciary duty claim but did not bear upon any of the other pleaded issues. We are not persuaded by Batang's argument that she had no opportunity to "mount a defense" against the claim. Batang was afforded an opportunity to object to Manto's line of questioning, as well as offer an explanation to her conduct on redirect, but she failed to do either. Moreover, Manto's closing brief extensively argued the issue. Accordingly, we find that the trial court did not err in considering the issue of fiduciary duty.
Batang's counsel defined the following as the issues in controversy: (1) characterization and division of the Bulrush property; (2) reimbursement for separate property contributions to the Post Oak property; and (3) the determination of attorney fees. At trial, the parties agreed there was also an issue regarding the division of some personal items.
Batang next argues the trial court erred in excluding her appraisal report of the Bulrush property from evidence. Even if erroneous, the trial court's decision would be harmless error. Batang had already testified to the current value of the property based upon "the comparables that [she] took out" a week before trial. More importantly, the error does not warrant reversal because the court based its holding on Batang's breach of fiduciary duty, which allows the court to deem the property's value to be "its highest value at the date of the breach of the fiduciary duty, the date of the sale or disposition of the asset, or the date of the award by the court." (§ 1101, subd. (g).) Thus, evidence of the property's worth during the trial is immaterial, and any error in excluding it from evidence was harmless. (Evid. Code, § 353, subd. (b).)
Batang actually argues the court prevented her from using the report to refresh her recollection of the property's value. The transcripts, however, show that the court only refused to "mark[] or introduce[]" the appraisal report into evidence.
D. The Post Oak Property
Batang argues the trial court erred in denying reimbursement for her separate property contribution to the Post Oak property's down payment. Spouses are entitled to reimbursement for contributions they make toward the acquisition of property to the extent they can adequately trace them to a separate property source. (§ 2640, subd. (b).) "Whether the spouse claiming a separate property interest has adequately traced an asset to a separate property source is a question of fact for the trial court, and its finding must be upheld if supported by substantial evidence. [Citations.]" (In re Marriage of Braud (1996) 45 Cal.App.4th 797, 823.) Contrary to what Batang's counsel claimed in his opening brief, the Post Oak property's down payment was paid from a joint bank account. Batang acknowledged at trial that both she and Manto regularly deposited funds into that account. Thus, even if Batang deposited separate funds into this account, she was required at trial to overcome the community property presumption that applies to commingled accounts. (Ibid.)
This is only one of numerous misrepresentations of the record in Batang's opening brief. For example, on page 10, Batang's counsel asserted that Manto released title on the Bulrush property during the refinancing transaction. In fact, he signed the grant deed in May 2006, more than seven months before the January 2007 refinancing. Counsel further asserted that Batang had transferred $109,000 from her San Diego home into a joint account. In fact, Manto had transferred the funds from his San Diego property. Counsel is reminded of his professional duty to avoid making false statements of fact or law to the court. (Rules of Prof. Conduct, rule 5-200.)
Batang's counsel relied on the direct tracing method to overcome the community property presumption. "Under the 'direct tracing' method, the disputed asset . . . is traced to the withdrawal of separate property funds from the commingled account. This method requires specific records reconstructing each separate and community property deposit, and each separate and community property payment as it occurs." (In re Marriage of Braud, supra, 45 Cal.App.4th at p. 823.) The records must adequately demonstrate there were sufficient separate property funds available in the account to cover the payment at the time it was made. (Ibid.; In re Marriage of Higinbotham (1988) 203 Cal.App.3d 322, 329.)
The down payment for the Post Oak property was made on May 23, 2005, in the amount of $53,136.06. On March 18, 2005, the account balance was $55,391. Batang did not explain the source of those funds. Deposits of $7,586 and withdrawals of $27,009 were made in the next month, leaving a balance of $35,968. Deposits of $18,306 and withdrawals of $4,477 were made the next month, leaving a balance of $49,795 on May 18. The deposits in that two-month period included $14,000 from Manto's Navy account and a wire transfer of $10,000, although no evidence showed the source of the $10,000. Between March 21 and May 23, Manto appears to have deposited over $15,000 from his Navy Federal checking account. The statements reflected extensive activity on the account. At the time the down payment was made, there were more than enough commingled funds in the account to make the payment and, due to Batang's and Manto's frequent activity, it would have been impossible—with the records and testimony provided—for the trial court to trace the payment to any single source. After the funds for the down payment were withdrawn from the joint account, a deposit in the amount of $50,000 was made on June 3 from what appears to be an equity line of credit from the Chino Hills home. In light of this evidence, we hold there was substantial evidence on the record to sustain the trial court's finding that Batang failed to meet her burden of proving the down payment for the Post Oak property came from a separate property source.
E. The Oriental Rug
Batang contends the trial court's finding that the Oriental rug was worth $3,500 was not supported by substantial evidence. In pretrial proceedings, the parties agreed to a disposition of personal property under which Manto was to receive two Oriental rugs. In his community property declaration, Manto described the rugs as "located in family and dining rooms" and listed their value as $4,000. The trial court ordered Batang to "return the rugs that were purchased in Japan" to Manto and set a time for him to pick them up. The parties agreed that the division of personal property was "basically of equal value."
At trial, Batang testified she was familiar with the rugs that had been in the dining room and family room and acknowledged she had agreed to return those rugs to Manto. She conceded she had not returned the rug that had been in the dining room; rather, she had thrown away that rug because her dog had soiled it. Manto testified that he had paid $3,500 for the missing rug, and he had agreed to accept only the two rugs in the parties' division of community personal property, while Batang received all the community furniture and appliances.
Without citation to any authority, Batang contends Manto's estimate of the rug's value was not substantial evidence. We disagree. An owner of property may state his opinion as to the value of the property. (Evid. Code, § 813, subds. (a)(2), (c).) Manto's testimony was sufficient to support the trial court's finding.
IV. DISPOSITION
The judgment is affirmed.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
HOLLENHORST
Acting P. J.
We concur:
RICHLI
J.
MILLER
J.